Why South Korea’s N-Po generation is excited about crypto

Share
Facebook
Twitter
Pinterest
WhatsApp
Telegram

Article Contents

In This Article

Amid economic challenges, South Korea is witnessing a surge in interest for digital currency, particularly among its youth — the “N-Po generation”

The N-Po generation — aged 20-39 — is grappling with economic challenges and societal pressures, but finds solace and opportunity in the booming digital market and the promises of Web3 tech.

The generation’s troubles began in 1997 when South Korea faced a severe currency crisis, which led to a significant depreciation of the Korean won and required a bailout from the International Monetary Fund (IMF).

Related: Gary Gensler approved the ETFs — but now he’s striking back

Subsequent restructuring attracted increased foreign investment, resulting in the acquisition of vital infrastructure companies such as the First Bank of Korea and Kumho Industrial by foreign entities.

This heavy reliance on foreign capital made the economy fragile, with companies prioritizing corporate profits over national interests, which then exacerbated inflationary pressures.

Rising housing prices, fueled by Chinese investment, also worsened the housing shortage, particularly in cities like Seoul, where a 60-square-meter apartment can exceed 100 million yen.

8cc278da d127 4c92 b58a b736c2aecd63
Housing price trends in South Korea from 2012-2023. Source: Federal Reserve Bank of St. Louis and the Bank for International Settlements

The N-Po generation

The term “N-Po generation” stems from the concept of abandonment, or “pogi” — leading to the abbreviated “po,” which reflects the economic struggles that young Koreans face. Those under 25 often forsake milestones like love, marriage, childbirth, homeownership, and social activities. They were initially coined as the “three-employed generation” in 2011 — because of the numerous jobs that members of the demographic held — even before youth unemployment figures rose in subsequent years.

Over time, it has expanded to encompass the “Five-Po generation” — which has relinquished job prospects and homeownership — and the “Seven-Po generation,” or those who have sacrificed relationships and dreams.

It’s a harsh reality, and the situation exacerbated by the fertility rate — which has plummeted below 1 to 0.78. 

6d704e3d 95b1 420f b27f 230a8d6d68b9
South Korean fertility rates from 1970-2020. Source: OECD Family Database

Societal disparities are evident. The top 3% are “elite,” which leaves the remaining 97% in the N-Po generation to grapple with limited opportunities and a sense of hierarchy.

South Korea’s thriving Web3 market

Today, despite these societal and economic challenges, South Korea’s Web3 market is experiencing remarkable growth.

The market shows major activity, with over 200,000 active users, approximately 15% of whom engage in trading on centralized exchanges (CEX). This strong purchasing power has even led to a “Kimchi premium” for stocks listed on Korean digital currency exchanges, with a 5-10% premium compared to exchanges elsewhere.

Low societal expectations

In a society plagued by inflation and soaring housing costs, achieving basic necessities becomes increasingly challenging on fixed incomes alone. The non-elite majority — 97% of the population — face limited options, leading to the emergence of the N-Po generation. Driven by a belief in their ability to break through adversity, they invest in high-risk assets, seeking a one-shot turnaround.

A young VC employee commented to me, “Web3 exists as an opportunity to expect more from yourself because you don’t expect anything from society. Web3 is not just 3.0 of the web, it is 3.0 as a third way for young people who are looking for a new way of life.”

State support for the digital currency market

In contrast to its previous cautious approach during the ICO bubble, the South Korean government now embraces the potential economic benefits of the digital currency market. This shift is evident, with initiatives including the pilot launch of a central bank digital currency (CBDC), which is coming in the fourth quarter 2024.

Additionally, efforts to establish legislation for security token offerings (STOs) signal a commitment to creating a regulatory framework for asset tokenization. Startups are also leveraging this environment to issue security tokens tied to real estate, facilitated by a sandbox registration system managed at the municipal level.

Internet society and an adventurous temperament

Dubbed as the “netizen” kingdom, South Korea’s extensive internet culture sees young individuals spending more time in digital realms than in reality. In this landscape, earning money through conventional means becomes challenging amidst societal constraints and the overwhelming influence of the internet.

Related: An Ethereum ETF is coming sooner than you expect

Faced with limited avenues for legitimate income, individuals increasingly turn to online platforms to vent real-world frustrations, leading to a surge in cryptocurrency gambling, particularly in altcoins and meme coins.

South Koreans — with their adventurous spirit — favor altcoin investments, according to research, while showing little interest for Bitcoin (BTC) and Ether (ETH).

Opinion leaders wield significant influence, despite a prevailing skepticism towards mainstream media among the youth. This has led to the emergence of KOL Telegram communities ranging from 2,000 to 200,000 members, considered pivotal in shaping consumer behavior.

Good opinion leaders also have a buying base of community members, while bad ones mainly attract airdrop hunters and grinders. Good ones tend to give feedback to the project, while observing that “too much” airdropping is not good for the quality of the community. Some are even quiet partners of well-known VC firms.

Projects need to be recognized by a good group of opinion leaders to find them helpful.

Number of community members ≠ purchasing power

Large communities with thousands of members often have strong purchasing power. At the same time, too many communities are filled with bots and bounty hunters, which hinder access to genuine buyers. Koreans nonetheless favor exclusive “inner groups,” and an excess of these can be generic, prompting serious investors to switch between communities for more focused information.

While the tone in South Korea may often be pessimistic, there is still fervor among crypto enthusiasts to find their light in the midst of societal darkness.

Shinnosuke “Shin” Murata is the founder of blockchain games developer Murasaki. He joined Japanese conglomerate Mitsui & Co. in 2014, doing automotive finance and trading in Malaysia, Venezuela and Bolivia. He left Mitsui to join a second-year startup called Jiraffe as the company’s first sales representative and later joined STVV, a Belgian football club, as its chief operating officer and assisted the club with creating a community token. He founded Murasaki in the Netherlands in 2019.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.